Silicon Laboratories Inc.
SILICON LABORATORIES INC (Form: 8-K, Received: 04/25/2018 08:04:49)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): April 25, 2018

 

SILICON LABORATORIES INC.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

 

000-29823

 

74-2793174

(State or Other Jurisdiction

 

(Commission File Number)

 

(IRS Employer

of Incorporation)

 

 

 

Identification No.)

 

400 West Cesar Chavez, Austin, TX

 

78701

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (512) 416-8500

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934. o

 

 

 



 

Item 2.02. Results of Operations and Financial Condition

 

On April 25, 2018, Silicon Laboratories Inc. (“Silicon Laboratories”) issued a press release describing its results of operations for its fiscal quarter ended March 31, 2018. A copy of the press release is attached as Exhibit 99 to this report.

 

Item 9.01. Financial Statements and Exhibits

 

(d) Exhibits.

 

99

 

Press Release of Silicon Laboratories Inc. dated April 25, 2018

 

Use of Non-GAAP Financial Information

 

From time to time, Silicon Laboratories provides certain non-GAAP financial measures as additional information relating to its operating results. The non-GAAP financial measurements provided in the press release furnished herewith do not replace the presentation of Silicon Laboratories’ GAAP financial results. These additional measurements merely provide supplemental information to assist investors in analyzing Silicon Laboratories’ financial position and results of operations; however, these measures are not in accordance with, or an alternative to, GAAP and may be different from non-GAAP measures used by other companies.

 

Non-GAAP financial measures used by Silicon Laboratories include non-GAAP gross margin, non-GAAP research and development expense, non-GAAP selling, general and administrative expense, non-GAAP operating income, non-GAAP interest expense, non-GAAP net income and non-GAAP diluted earnings per share. Silicon Laboratories has chosen to provide this information to investors because it believes that such supplemental information enables them to perform meaningful comparisons of past, present and future operating results, and as a means to highlight the results of core ongoing operations.

 

Non-GAAP financial measures are adjusted by the following items:

 

·                   Stock compensation expense — represents charges for employee stock awards issued under Silicon Laboratories’ stock-based compensation plans. Stock compensation expense is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

 

·                   Intangible asset amortization — primarily represents charges for the amortization of intangibles assets, such as core and developed technology, customer relationships and trademarks, acquired in connection with business combinations. Intangible asset amortization is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

 

·                   Acquisition related items — primarily including the following: charges for the fair value write-up associated with inventory acquired; adjustments to the fair value of acquisition-related contingent consideration; and acquisition-related costs to effect a business combination, such as costs for attorneys, investment bankers, accountants and other third party service providers. Acquisition related items are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

 

·                   Termination costs, impairments and fair value adjustments — primarily include costs associated with certain employee terminations, asset impairments and fair value adjustments resulting from observable price changes. Termination costs, impairments and fair value adjustments are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

 

2



 

·                   Non-cash interest expense — represents charges for the amortization of the debt discount on Silicon Laboratories’ convertible senior notes. Such interest expense is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

 

·                   Income tax adjustments — primarily include the following: the effect of the Tax Cuts & Jobs Act of 2017; the current and deferred income tax effects of the above non-GAAP adjustments; other indirect impacts of excluding stock-based compensation; and the income tax impact of certain intercompany license arrangements for technology acquired in business combinations. Income tax adjustments are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

 

Pursuant to the requirements of Regulation G, we have provided in the press release furnished with this report a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

 

The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.  The information contained therein and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Silicon Laboratories, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

99

 

Press Release of Silicon Laboratories Inc. dated April 25, 2018

 

4



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

SILICON LABORATORIES INC.

 

 

 

 

 

 

April 25, 2018

 

/s/ John C. Hollister

Date

 

John C. Hollister

 

 

Senior Vice President and Chief Financial Officer (Principal Financial Officer)

 

5


Exhibit 99

 

 

Silicon Labs Announces First Quarter 2018 Results

 

— Company Delivers 15 Percent Q1 Year-on-Year Revenue Growth —

 

AUSTIN, Texas — April 25, 2018 — Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its first quarter ended March 31, 2018. Revenue in the first quarter exceeded the high end of guidance at $205 million, up from $201 million in the fourth quarter, and establishing a new all-time record. First quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.60 and $0.87, respectively.

 

“We are very pleased to report outstanding first quarter 2018 financial performance, including 15 percent Q1 year-on-year revenue growth,” said Tyson Tuttle, CEO of Silicon Labs. “We are excited about the acquisition of Z-Wave, and believe we have the right strategy, products and team in place to achieve our growth objectives. Together, we will continue to deliver differentiated solutions to address large, sustainable, high-quality growth markets.”

 

First Quarter Financial Highlights

 

·                   Infrastructure revenue increased to $49 million, up 26% sequentially and 37% year-on-year.

·                   IoT revenue declined to $103 million, down 6% sequentially and up 17% year-on-year.

·                   Broadcast revenue was $36 million, up less than 1% sequentially and down 3% year-on-year.

·                   Access revenue increased to $17 million, up 2% sequentially and down 6% year-on-year.

 

On a GAAP basis:

 

·                   GAAP gross margin was 60.5%.

·                   GAAP R&D expenses were $55 million.

·                   GAAP SG&A expenses were $46 million.

·                   GAAP operating income as a percentage of revenue was 11.5%.

·                   GAAP diluted earnings per share were $0.60.

 

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

 

·                   Non-GAAP gross margin was 60.6%.

 



 

·                   Non-GAAP R&D expenses were $44 million.

·                   Non-GAAP SG&A expenses were $37 million.

·                   Non-GAAP operating income as a percentage of revenue was 20.9%.

·                   Non-GAAP diluted earnings per share were $0.87.

 

Product Highlights

 

·                   Introduced the first low-power Wi-Fi® portfolio, including WF200 transceivers and WFM200 modules, designed specifically for the IoT.

·                   Released the industry’s first comprehensive network performance results based on large-scale testing of Zigbee®, Thread and Bluetooth® mesh software.

·                   Expanded the EFM32™ Tiny Gecko MCU family to provide a cost-effective, ultra-low-power solution for connected devices requiring long battery life.

·                   Launched the Si3406x and Si3404 Power over Ethernet (PoE) Powered Device (PD) families delivering best-in-class integration and power conversion efficiency for a wide range of IoT applications.

·                   Introduced new low-power PCI Express® Si532xx clock buffers providing low-jitter clock distribution for data center, industrial, communications and consumer designs.

 

Business Highlights

 

·                   Completed the asset purchase of Sigma Designs’ Z-Wave business for $240 million on April 18, 2018, expanding Silicon Labs’ leading position in mesh networking for the smart home.

·                   Won VDC Research’s Embeddy Award for Best of Show in the hardware category for the WFx200 Wi-Fi portfolio at the 2018 Embedded World conference.

 

Business Outlook

 

The company expects revenue in the second quarter to be in the range of $211 million to $217 million, and also estimates the following:

 

On a GAAP basis:

 

·                   GAAP gross margin at approximately 58.5%.

·                   GAAP operating expenses at approximately $111.0 million.

·                   GAAP effective tax rate at 0.0%.

·                   GAAP diluted earnings per share between $0.23 and $0.29.

 

On a non-GAAP basis, and excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

 

·                   Non-GAAP gross margin at approximately 59.5%.

·                   Non-GAAP operating expenses at approximately $86.0 million.

·                   Non-GAAP effective tax rate at 11.0%.

·                   Non-GAAP diluted earnings per share between $0.81 and $0.87.

 



 

Webcast and Conference Call

 

A conference call discussing the quarterly results will follow this press release at 7:30 a.m. Central time. An audio webcast will be available on Silicon Labs’ website (www.silabs.com) under Investor Relations. A replay will be available after the call at the same website listed above or by calling 1 (855) 859-2056 or (404) 537-3406 (international) and entering conference 88340291. The replay will be available through May 23, 2018.

 

About Silicon Labs

 

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for a smarter, more connected world. Our award-winning technologies are shaping the future of the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. Our world-class engineering team creates products focused on performance, energy savings, connectivity and simplicity. www.silabs.com

 

Forward-Looking Statements

 

This press release contains forward-looking statements based on Silicon Labs’ current expectations. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan,” “project,” “will” and similar phrases as they relate to Silicon Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Labs and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: risks that Silicon Labs may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; risks associated with acquisitions and divestitures; product liability risks; difficulties managing our distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with our accounts receivable; dependence on key personnel; stock price volatility; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Labs’ business and results of operations to risks of natural disasters, epidemics, war and political unrest; debt-related risks; capital-raising risks; the competitive and cyclical nature of the semiconductor industry; average selling prices of products may decrease significantly and rapidly; information technology risks; cyber-attacks against our products and our networks; conflict mineral risks and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. Silicon Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. References in this press release to Silicon Labs shall mean Silicon Laboratories Inc.

 

Note to editors: Silicon Laboratories, Silicon Labs, the “S” symbol, and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

 

CONTACT: Jalene Hoover, +1 (512) 428-1610, Jalene.Hoover@silabs.com

 



 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,
2018

 

April 1,
2017

 

Revenues

 

$

205,384

 

$

179,028

 

Cost of revenues

 

81,147

 

73,867

 

Gross margin

 

124,237

 

105,161

 

Operating expenses:

 

 

 

 

 

Research and development

 

54,828

 

52,324

 

Selling, general and administrative

 

45,694

 

40,155

 

Operating expenses

 

100,522

 

92,479

 

Operating income

 

23,715

 

12,682

 

Other income (expense):

 

 

 

 

 

Interest income and other, net

 

3,202

 

576

 

Interest expense

 

(4,883

)

198

 

Income before income taxes

 

22,034

 

13,456

 

Provision (benefit) for income taxes

 

(4,371

)

(1,970

)

Net income

 

$

26,405

 

$

15,426

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

 

$

0.61

 

$

0.37

 

Diluted

 

$

0.60

 

$

0.36

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

Basic

 

42,963

 

42,096

 

Diluted

 

43,918

 

43,030

 

 



 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

 

 

Three Months Ended
March 31, 2018

 

Non-GAAP Income
Statement Items

 

GAAP
Measure

 

GAAP
Percent of
Revenue

 

Stock
Compensation
Expense

 

Intangible
Asset
Amortization

 

Acquisition
Related
Items

 

Non-GAAP
Measure

 

Non-GAAP
Percent of
Revenue

 

Revenues

 

$

205,384

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

124,237

 

60.5

%

$

296

 

$

 

$

 

$

124,533

 

60.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

54,828

 

26.7

%

5,769

 

4,787

 

 

44,272

 

21.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

45,694

 

22.3

%

6,127

 

1,515

 

700

 

37,352

 

18.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

23,715

 

11.5

%

12,192

 

6,302

 

700

 

42,909

 

20.9

%

 

 

 

Three Months Ended
March 31, 2018

 

Non-GAAP
Earnings Per Share

 

GAAP
Measure

 

Stock
Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Acquisition
Related
Items*

 

Termination
Costs,
Impairments
And Fair Value
Adjustments*

 

Non-cash
Interest
Expense*

 

Income Tax
Adjustments

 

Non-GAAP
Measure

 

Net income

 

$

26,405

 

$

12,192

 

$

6,302

 

$

700

 

$

(985

)

$

2,754

 

$

(9,045

)

$

38,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

43,918

 

 

 

 

 

 

 

 

 

 

 

 

 

43,918

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.87

 

 


* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

 

 

Three Months Ending
June 30, 2018

 

Business Outlook

 

GAAP
Measure

 

Non-GAAP
Adjustments

 

Non-GAAP
Measure

 

Gross margin

 

58.5

%

1.0

%

59.5

%

 

 

 

 

 

 

 

 

Operating expenses

 

$

111

 

$

25

 

$

86

 

 

 

 

 

 

 

 

 

Effective tax rate

 

0.0

%

11.0

%

11.0

%

 

 

 

 

 

 

 

 

Diluted earnings per share - low

 

$

0.23

 

$

0.58

 

$

0.81

 

 

 

 

 

 

 

 

 

Diluted earnings per share - high

 

$

0.29

 

$

0.58

 

$

0.87

 

 



 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

 

 

March 31,
2018

 

December 30,
2017

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

342,272

 

$

269,366

 

Short-term investments

 

417,867

 

494,657

 

Accounts receivable, net

 

75,122

 

71,367

 

Inventories

 

76,505

 

73,132

 

Prepaid expenses and other current assets

 

64,555

 

39,120

 

Total current assets

 

976,321

 

947,642

 

Property and equipment, net

 

129,894

 

127,682

 

Goodwill

 

288,227

 

288,227

 

Other intangible assets, net

 

76,716

 

83,144

 

Other assets, net

 

94,837

 

88,387

 

Total assets

 

$

1,565,995

 

$

1,535,082

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

50,068

 

$

38,851

 

Deferred revenue and returns liability

 

25,426

 

 

Deferred income on shipments to distributors

 

 

50,115

 

Other current liabilities

 

69,310

 

73,359

 

Total current liabilities

 

144,804

 

162,325

 

Convertible debt

 

345,049

 

341,879

 

Other non-current liabilities

 

75,567

 

77,862

 

Total liabilities

 

565,420

 

582,066

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock — $0.0001 par value; 10,000 shares authorized; no shares issued

 

 

 

Common stock — $0.0001 par value; 250,000 shares authorized; 43,227 and 42,707 shares issued and outstanding at March 31, 2018 and December 30, 2017, respectively

 

4

 

4

 

Additional paid-in capital

 

98,396

 

102,862

 

Retained earnings

 

904,160

 

851,307

 

Accumulated other comprehensive loss

 

(1,985

)

(1,157

)

Total stockholders’ equity

 

1,000,575

 

953,016

 

Total liabilities and stockholders’ equity

 

$

1,565,995

 

$

1,535,082

 

 



 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,
2018

 

April 1,
2017

 

Operating Activities

 

 

 

 

 

Net income

 

$

26,405

 

$

15,426

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

Depreciation of property and equipment

 

3,704

 

3,596

 

Amortization of other intangible assets and other assets

 

6,427

 

6,752

 

Amortization of debt discount and debt issuance costs

 

3,169

 

869

 

Stock-based compensation expense

 

12,192

 

10,486

 

Deferred income taxes

 

(4,780

)

(4,059

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(3,307

)

(1,252

)

Inventories

 

(3,368

)

(1,636

)

Prepaid expenses and other assets

 

(17,169

)

6,708

 

Accounts payable

 

13,030

 

5,565

 

Other current liabilities and income taxes

 

(9,643

)

(2,944

)

Deferred income, deferred revenue and returns liability

 

(2,599

)

4,038

 

Other non-current liabilities

 

(1,849

)

(1,536

)

Net cash provided by operating activities

 

22,212

 

42,013

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

Purchases of available-for-sale investments

 

(52,821

)

(267,777

)

Sales and maturities of available-for-sale investments

 

128,975

 

25,595

 

Purchases of property and equipment

 

(4,102

)

(4,543

)

Purchases of other assets

 

(4,698

)

(1,446

)

Acquisition of business, net of cash acquired

 

 

(13,658

)

Net cash provided by (used in) investing activities

 

67,354

 

(261,829

)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Proceeds from issuance of long-term debt, net

 

 

390,000

 

Payments on debt

 

 

(72,500

)

Payment of taxes withheld for vested stock awards

 

(17,871

)

(13,553

)

Proceeds from the issuance of common stock

 

1,211

 

162

 

Net cash provided by (used in) financing activities

 

(16,660

)

304,109

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

72,906

 

84,293

 

Cash and cash equivalents at beginning of period

 

269,366

 

141,106

 

Cash and cash equivalents at end of period

 

$

342,272

 

$

225,399